ItsJustMe

Accounting Antics Lift I-Bank Earnings - Barron's

The quarterly financials are not audited so therefore you don't have pesky auditors asking uncomfortable questions about the likelihood of your mark-to-market assumptions. I suspect the analysts didn't anticipate the brazenness of the IB's since they were desperate to show positive earnings in the wake of the Bear Stearns bankruptcy.

Also, the likelihood of the IB's staying solvent (at least now with help from the Fed) is much greater than all the underwater homeowners eventually paying everything off. As a CPA and former auditor, I can tell you that writing down your own debt would not pass the smell test with me unless it came with a going-concern opinion.

I suspect their own CPAs will tell them the same thing come year-end unless they want to go the way of Arthur Andersen...